GST Growth Slows Sharply: Jairam Ramesh Slams Economic Mismanagement

Jairam Ramesh, Member of Parliament and General Secretary (Communications) of the All India Congress Committee (AICC), has raised alarms over India’s slowing Goods and Services Tax (GST) revenue growth, calling it symptomatic of deeper economic distress.

In a strongly-worded statement, Ramesh highlighted that December 2024 witnessed the second-slowest GST collection growth in over three years, with net receipts after refunds increasing by only 3.3%—the lowest in FY25 so far. He attributed the shortfall to systemic inefficiencies, policy missteps, and underlying economic frailties.

Revenue Shortfalls and Social Welfare Cuts

According to Ramesh, GST collections for the first three-quarters of FY25 grew at 8.6%, significantly trailing the budgeted estimate of 11% growth. He cautioned that this revenue slump must not become an excuse for the government to curtail essential social welfare programs like MGNREGA, particularly when rural wages remain stagnant and consumption weak. Instead, he urged the government to bolster public expenditure as a stimulus for economic revival.

Fraudulent Refunds and Systemic Loopholes

Ramesh pointed out that a staggering 45.3% increase in GST refunds in December could partly be attributed to fraudulent practices. He criticized the GST system's complexity and inadequate enforcement, which have enabled large-scale fraud.

“Over ₹35,132 crore worth of Input Tax Credit (ITC) fraud has been identified, with only 12% recovered so far. Fake companies, false invoices, inflated turnover, and ineligible export refunds have exploited the system,” Ramesh stated. He also blamed loopholes in the GST registration process and weak supply chain tracking for the rampant misuse.

Our statement on the disappointing GST revenue collection numbers in December 2024 and its implications for our economy and Union Budget 2025 pic.twitter.com/b0cbfys0Og

— Jairam Ramesh (@Jairam_Ramesh) January 3, 2025

A Symptom of Economic Malaise

The GST slowdown, Ramesh argued, reflects a broader economic downturn. GDP growth during Q2 FY25 stood at a tepid 5.4%, mirroring an equally weak private investment growth of 5.4%. Stagnant rural wages, high inflation, and mass unemployment have compounded the problem, locking India into a vicious cycle of low consumption, investment, growth, and wages.

“Prominent voices in India Inc. have sounded the alarm on stagnant consumption. Mounting evidence shows rural wages have remained flat for the past decade amidst rising living costs,” Ramesh said, linking these trends to widespread public distress.

Call for Bold Reforms in Budget 2025

Ramesh urged the government to shift its focus from trivial tax measures—citing the example of taxing popcorn—to addressing the complexities of the economy. He advocated for a revamped GST framework, or "GST 2.0," as envisioned in the Congress's 2024 Lok Sabha election manifesto, to simplify the tax system and enhance its efficacy.

The upcoming Union Budget, he emphasized, must prioritize income support for the poor, tax relief for the middle class, and an end to what he described as “tax and investigative agency terrorism” that is driving entrepreneurs out of the country.

“The litany of demoralizing economic news demands decisive action. The government must tackle structural issues head-on to restore growth, confidence, and fairness in the economy,” Ramesh concluded.

The statement by Ramesh reflects growing concerns over India’s economic trajectory and sets the stage for critical debates ahead of the Union Budget 2025.